U.S. Airways, American Airlines merger settlement reached; service to continue at Va. airports

The U.S. Department of Justice and several states, including Virginia, announced a settlement agreement Tuesday allowing the merger of U.S. Airways and American Airlines, creating the largest commercial airline in the country.

As a result of the settlement with Virginia and other states, the new airline, which will operate under the American Airlines name, will have to keep service at every Virginia airport currently serviced by U.S. Airways and American for at least five years.

The terms of the agreement are particularly important at Newport News-Williamsburg International Airport, where U.S. Airways is the largest single carrier, with 49 percent of the market share this year, according to Ken Spirito, executive director of the airport.

In March of 2012, the airport lost service from AirTran, at the time the largest airline at the airport, when it merged with Southwest.

"This is very good news, and we are grateful to all who have made it happen," said Doug Parker, chairman and CEO of U.S. Airways, who will serve as CEO of the new combined airline.

"In particular, we are thankful to our employees, who throughout this process continued to believe in a better future as one airline and who voiced their support passionately and consistently … We are pleased to have this lawsuit behind us and look forward to building the new American Airlines together."

On Tuesday, outgoing Virginia Attorney General Ken Cuccinelli hailed the terms of the agreement with U.S. Airways and American Airlines, saying it would help protect air travel in Virginia.

"The merger, as it was proposed, would have significantly reduced competition and posed too big of a threat of higher fares for Virginia consumers," Cuccinelli said in a statement released from his office. "That would have been especially true at Reagan National Airport, where the combined airline would have held 69 percent of the takeoff and landing slots — almost six times more than its closest competitor," Cuccinelli said. "We are satisfied that this agreement will maintain the competition necessary to keep routes open and keep prices lower for consumers."

As part of the deal, the airlines will have to sell of 52 slot pairs at Reagan National Airport in Washington, D.C. and 17 slot pairs at New York's LaGuardia Airport.

Spirito said that Cuccinelli's office did not contact the Newport News airport as part of its efforts, but said he was glad the settlement agreement was reached.

"There was no outreach by the [Attorney General's] office in this effort. We're certainly happy that the office took it upon themselves to ensure that Virginia airports were protected. We were not part of that process. I don't know what airports were," Spirito said. Spirito said he expected the merger to have a positive effect because U.S. Airways has a strong customer base at the airport. "We're pretty confident that this will benefit the brand loyalty, even though it's changing to American," Spirito said. U.S. Airways currently offers service to Philadelphia and Charlotte from Newport News-Williamsburg International.

A spokesman for Norfolk International Airport, which has service from both airlines, said he did not expect any major changes in service as a result of the merger.

"We haven't been told there's going to be any effect on air service or employees here," he said. But he conceded that at times airline mergers have resulted in job losses. "In almost every other merger that's happened with airlines, there is a reconciliation of personnel and routes," Braden said.

He said American had 7.5 percent of local market share at the Norfolk airport through September, and U.S. Airways had 22.7 percent of the market share. "If they carried those exact number — which there is no guarantee — it would be the largest carrier here," Braden said.

The airline merger might push local fares higher, according to Gary Wagner, an economist at Old Dominion University.

"The issue about how much fares might be expected to increase will vary depending on the passenger demand for specific routes and the number of competing airlines that fly to that destination," Wagner said. "In other words, a high-demand route with no other competing airline will experience the highest fare increases. It's hard to generalize the expected increase because they are so destination-demand specific," he said.